Industrial Process Management Cycle - Assignment Example

Manufacturing Organization; Systems and Benefits By + Introduction In the aftermath of World War II, Japan businessmen turned to American Industrial expert Edwards Deming for help in rebuilding the Japanese economy. Edwards introduced new ways of manufacturing that ensured efficient production of high quality goods. This revolutionary knowledge was used to turn Japan into an industrial heavy weight and an economic powerhouse (Ludema, 2007). Companies such as Sony Corporation and Toyota Motor Corporation became global leaders in their fields after adopting Deming’s concepts of production. The contagion effect spread over to other Asian countries which eventually gobbled away at America’s customers due to the inflexibility of most American companies to adoption of Deming’s concepts. Deming build his concepts on the idea of using data to measure the manufacturing process. This included determining how efficient a company was, the quality of products it produced and how the overall management of the company was done. He advocated for top corporate management’s active role in fixing flawed manufacturing processes which was inherent in many companies. Deming believed that management was responsible for the performance of a company. Poor quality products are a result of poor designing of manufacturing system by the management. He criticised quality control approaches by U.S companies that mainly focused on dealing with defects after products were manufactured. He advocated for designing the manufacturing processes in such a way as to ensure quality non-defective products were produced. This reasoning made economic sense. Poorly made products leaves companies with two scenarios, that is, scrap off the product which implies wasting the resources used in making it or shipping the defective product to the market which would lead to alienation of customers. Therefore, manufacturing quality products saves the company its resources and customer base (Wright, 1990). The implementation of Deming concepts shifted economic power from U.S towards Far East. Japan’s automobile and electronic companies tore into larger slices of global market which led to shrinkage of U.S companies. The objective of this study is to find out the best manufacturing processes that can be integrated into the organization’s plan to ensure quality output and competitive advantage is attained by companies. This paper discusses the manufacturing organization of companies including the processes involved. It further discusses the impacts, benefits and challenges of using organization systems by manufacturing companies. Manufacturing Organization The process of manufacturing involves converting raw materials into finished products by carrying out industrial processes. Industrial Process Management Cycle Product life cycle management helps in organizing interactions between different phases of production for the realization of desired output products. This helps in achieving customer satisfaction while at the same doing it efficiently in line with the firm’s objectives. This process involves proper estimation, planning, scheduling, execution and evaluation of production processes (Grewal, 2011). The life cycle management can be divided into three phase methods. Firstly, Life cycle engineering which is made up of functions and target oriented methods for life cycle product design and planning. Secondly, life time management focuses on enhancing the quality of products and deals with issues such as product failures. Finally, product cycle management targets closed loop systems for resource and information flow. Product life cycle The product life cycle has four clearly defined stages (Wilson, 2010). The introduction stage involves product launching and it could be the most expensive stage. Sales are low at this stage since the market size is small. Marketing costs and other related research costs are heavily incurred at this phase. The growth stage is characterized by increased sales and market expansion. The company starts benefiting from economies of scale and promotional activities are done to maximize the growth. Maturity stage is the period where the product is established and the objective of firms is to maintain the market share. Competition is rife and firms have to keep abreast of others in terms of product improvements and marketing initiatives to gain a competitive advantage over other firms. The decline stage is where the market base of the product starts shrinking. This could be due to consumer shifts in consumptions or market saturation. Companies adapt to cheaper production methods to put up with these conditions. Life Cycle of Materials Companies process raw materials into finished products in a continuous process that involves movement of materials from one stage to the other. Raw materials are extracted from natural resources such as oil. The extracted materials are then refined to give bulk materials such as cement that are processed into engineering materials like concrete which are used in producing final products such as cars. These products are then used by customers over time depreciating in value. The products eventually become waste and are either disposed or recycled back to the cycle (Krieg, 2005) Manufacturing companies asses their performance by benchmarking themselves against their competitors within and across other industries. These companies have established goals which are communicated to all stakeholders. The performance of the companies is normally assessed against these objectives. Manufacturers emphasize on customer and stakeholder satisfaction orientation in the production processes. The firms identify their customers and implement systems that work towards meeting the needs of these customers. Manufacturing organizations integrate elements of manufacturing systems to meet the market expectations and cope up with emerging trends. The organization eliminates any obstacles to enable communication flow and enhance quality production Manufacturers do recognize employee engagements and they empower employees so as to achieve continuous improvements in the manufacturing system. Employee involvement ensures continuity in organizational development. Manufacturing companies need to motivate suppliers to become equivalents of other elements of manufacturing. These demands commitment and dedicated efforts towards supplier integration. Classification of discrete production Mass production involves large scale production although product variety is minimal. Batch production involves average production and the variety of products is also average. Jobbing shop production involves small scale production but with a higher variation in products (Hobbs, 2004). Work Organizations Job Shop A job shop is a general purpose facility capable of producing various products in small volumes. Skilled workers use general purpose machines are used to produce a variety of products. Productivity is usually low and scheduling of processes is done by route sheets (Wilson, 2010). Assembly Shop This is a highly automated process where discrete parts are put together to make a finished product. Products are produced in a continuous manner and high volumes. The assembly line is very inflexible as the plant is usually defined for a single product line. It is the most productive with a product oriented layout. Line balancing is important and dissimilar machines are grouped in a line to balance flow (Ludema, 2007). Batch Process Here common components are used to form products as required. It involves complicated scheduling in a functional layout where products are produced in large batches and stored (Pisaro, 1995). Cellular Manufacturing Also known as group technology, products are grouped into families such that members of the same family are processed in a cell. Multi-tasking workers use flexible machines to manufacture one item at a time. Machines in cells are linked in a cellular layout (Swift, 2013). Manufacturing System Hierarchy Production System A production system involves all aspects of stakeholders, plant and machinery and information considered collective Manufacturing System A manufacturing system is a series of activities resulting in a given final product. It outlines the entire arrangement of all procedures, personnel and equipment. Manufacturing Process It is a specific piece of equipment that is designed to meet specific manufacturing processes. Job Station A job station entails a collection of tasks performed by one worker at a particular location on the assembly line. Operation An operation is a given action which can be combined by other actions to make up the job of an employee. Manufacturers should ensure they manufacture quality products. There is need for quality controls and assurances standards to ensure this is achieved. Integration of quality systems is equally important to make sure customer expectations are met. Quality management is imperative to keep the organization’s activities in line with set quality standards. Inventory management should be employed in determining the flow of products. Storage of products comes with its costs and every organization should ensure it keeps an optimal amount of inventory. The manufacturing process should also be kept as lean as possible. This entails doing away with any wastage in the manufacturing system to ensure resources are used efficiently and unnecessary costs are cut. Benefits of Manufacturing Organization Effects Organization Structure An organizational structure outlines the way responsibility is allocated and work procedures carried out among members of the organization. It includes centralization of authority, nature of layers of hierarchy and horizontal integration among other things (Gupta, 2009). The table below shows how organization structure relates to internal communication of an organization. C Centralization refers to the degree to which the right to decision making and activity evaluation is concentrated. Flatness of an organization on the other hand refers to the levels of management hierarchy in an organization. A flat organization reduces information delays and distortion due to fewer levels of hierarchy. Specialization of employees or departments refers to the degree to which employees or departments are functionally integrated. Internal communication is viewed as a transmission process through which a channel that includes messages, the mode of channelling the message, feedback and communication impacts (Gupta, 2009). Communication is negatively related to internal communication. Communication in decentralized organizations is much greater than communication in complex centralized organization (Wilson, 2010) Flatness is positively related to internal communication. Communication is more developed in organizations with low hierarchy levels. Increase in employee training and knowledge training due to horizontal integration increases the level of internal communication (Hobbs, 2004). Horizontal training is positively related to internal communication as specialised employees are more likely to share ideas in a highly integrated organization than in a low integrated organization. Relationship between Interior Communication and Managerial Integration Internal communication increases the flow of information between employees allowing them to improve coordination of activities. Organizations develop close relationships and collaborative behaviours because of richness in communication between departments. Empirical studies have attributed positive effects such as inter-functional integration, coordination and market orientation (Pisaro, 1995). Internal communication leads to internal integration, customer integration and supplier integration. Benefits Internal Integration Benefits High levels of internal integration will keep the firm on its toes, that is, it will regularly examine its performance compared to other competitors and will be able to quickly understand customer needs. Uncertainty is reduced due to improved communication between departments. Decision making process is improved by information sharing by cross-functional teams of skilled employees. Sharing of information and technological advances helps the organization to develop high quality products with new features that meet customer expectations (Gupta, 2009) From the above discussion it can be noted that internal integration leads to performance related benefits to the organization. These benefits include Product innovation, quality enhancement, delivery time performance and efficient cost management. Benefits of Supplier Integration Supplier integration stimulates the long run commitment and enhances trust. Suppliers can provide information feedback on pricing, materials and qualities. Supplier engagement in early stages of product development can also shorten the manufacturing period. There is a positive relation between supplier integration and the quality of goods, process flexibility, cost and delivery reliability (Wilson, 2010). Benefits of Customer Integration Customers are strategic collaborators in any business. Customers provide important information that can help the organization to improve its product performance. This evaluation by customers helps reduce uncertainty as the organization is able to prepare for the future consumer needs. Customer integration is directly associated with performance indexes such as delivery speed, flexibility and receptiveness (Ludema, 2007). Problems of Using Organization Systems Dualism of Power High level centralization within a holding group results in limited autonomy of subordinate companies. The board members of such subsidiary companies tend to seek comprise between the interests of the firm and the interests of the parent firm. Conflicts can easily arise in such scenarios which can easily affect the subsidiary firm’s organization integration (Visionary Manufacturing Challenges of 2020, 1998). Organization Standards Inconsistent organization standards, incoherent management systems and poor approaches towards human resource management pose serious problems to organization integration. These factors are characteristic of high management costs (Visionary Manufacturing Challenges of 2020, 1998). References Grewal, S. 2011. Manufacturing process design and costing an integrated approach. London: Springer. Gupta, H. N. 2009. Manufacturing Process 2nd ed. Daryaganj, New Delhi: New Age International Ltd.. Hobbs, D. P. 2004. Lean manufacturing implementation a complete execution manual for any size manufacturer. Boca Raton, Fla.: J. Ross Pub. :. Krieg, G. N. 2005. Kanban-controlled manufacturing systems. Berlin: Springer. Ludema, K. C., & Caddell, R. M. 2007. Manufacturing engineering: economics and processes. Englewood Cliffs, N.J.: Prentice-Hall. Pisano, G. P. 1995. Manufacturing renaissance. Boston, MA: Harvard Business School Press. Swift, K. G., & Booker, J. D. 2013. Manufacturing process selection handbook. Oxford: Butterworth-Heinemann. Visionary manufacturing challenges for 2020. 1998. Washington, D.C.: National Academy Press. Wilson, L. 2010. How to implement lean manufacturing. New York: McGraw-Hill. Wright, R. T. 1990. Manufacturing systems. South Holland, Ill.: Goodheart-Willcox Co. B1. Machine A Break-even Analysis Machine B Break-even Analysis Break-even Points: Machine A= 75000/ (25-13) = 6250 units. Machine B = 87000/ (25-10.5) = 6000 units. The company will have to produce and sell 6250 units while using machine A in order to cover for total expenses fixed and variable. It would have to produce and sell 6000 units using machine B to cover for all its expenses fixed and variable. I would recommend the purchase of machine B since it has a lower break-even point due to its low variable costs that outdo the effect of its higher fixed cost as compared to Machine A. B2. True cost= direct costs+ overhead costs Material costs = 2500*2= 5000 Labor costs (2500*4/60)15 = 2500 Total overheads = 2500* 350/100 = 8750. True cost = 5000+2500+8750 = 16250 B3. Year Cash flows for machine A Cash flows for machine B 1 -80000 -80000 2 5000 35000 3 8000 25000 4 12000 18000 5 20000 10000 6 25000 7000 7 30000 5000 i) Payback Period Machine A – 7 years Machine B- 5 Years I would choose machine B because it has a shorter payback period compared to machine A. ii) Payback period does not consider the cash flows past the payback period and hence cannot be used to estimate expected returns of entire machine’s life. b) Net Present Value at a 7% discount rate NPV = P.V of cash flows – invested capital Project A 0.9346*5000 + 0.8734*8000 + 0.8163*12000 + 0.7629*20000 + 0.7130*25000 + 0.663*30000 = 74430 74430 - 80,000 = -5570 Project B 0.9346*35000 + 0.8734*25000 + 0.8163*18000 + 0.7629*10000 + 0.7130*7000 +0.663*5000 = 85175 8175 – 80000 = 5175 c) I) NPV of machine A at 4% discount rate 0.9615*5000 + 0.9246*8000 + 0.8890*12000 + 0.8548*20000 + 0.8219*25000 + 0.7903*30000 = 84225 84225-80000 = 4225. B4. Sample Batches 10 x Diameter (cm) Average (cm) Range (mm) 1 25.0,25.1,24.8,25.1,25.1,24.9,25.0,25.0,24.9,25.1 25 24.5-25.5 2 25.2,24.9,24.9,25.0,25.0,25.1,25.1,24.9,25.1,25.1 25.03 24.53-25.53 3 25.0,25.1,25.2,25.2,25.3,25.1,25.0,25.4,25.0,25.1 25.14 24.64-25.64 4 25.2,25.4,25.4,25.5,25.4,25.5,25.3,25.2,25.2,25.4 25.35 24.85-25.85 5 25.3,25.4,25.3,25.5,25.6,25.2,25.3,25.5,25.5,25.4 25.4 24.9-25.9 6 25.2,25.4,25.3,25.6,25.6,25.5,25.6,25.6,25.4,25.4 25.46 24.96-29.96 7 25.4,25.5,25.6,25.7,25.6,25.6,25.7,25.6,25.7,25.4 25.58 25.08-26.08 8 25.7,25.6,25.7,25.6,25.6,25.6,25.4,25.7,25.6,25.8 25.63 25.13-26.13 1cm = 10 mm 5mm = 0.5cm Average Chart Range control chart Read More